Guy Adams, who has run the Isle of Barra Beach Hotel in the Hebrides for 16 years, may be forced to close his doors to guests for at least a year as spiralling energy bills make business untenable.
The hotelier’s annual electricity bill is projected to rise from about £25,000 to £120,000 on top of a wave of price increases expected from suppliers, who are also facing soaring costs.
He says the boutique hotel, which lays claim to be Britain’s most westerly, would have to double the prices it charges it guests next year – to a level Adams believes cash-strapped holidaymakers will not pay – unless Liz Truss turns her “pro-business” promises into rapid action.
“We can’t quote anyone looking to book their holidays next summer because we can’t give them a rate,” he says.
“But we are looking like we would have to more than double our rates. If we do that we would not expect anyone to be able to pay that, given everyone’s costs have gone up. We would have paper rates and no business.
“We must now look at not opening next year – shut down for at least a year. We have no option but to put it on the table given the huge overnight increase in energy costs. It will be cheaper to not open than open.”
Truss campaigned as a pro-business leader with promises such as ditching the recent increase in national insurance and a planned rise in corporation tax, as well as pledging a reform of business rates to win over Tory party members.
Responding to Truss’s appointment, Sir Rocco Forte, the Brexiter hotelier and Tory donor who hit out at Boris Johnson earlier this year, said: “From what I have seen of her, Liz Truss is a very determined person and has a very clear idea as to what she has to do. I am very hopeful.”
Forte added: “I think obviously she has to tackle the cost of living and energy. She has said she is going to reduce taxes and I would like to see how she is going to do that.
“We have had so many years of seeing the same policies being discussed and very little growth. It is about time something new was started.
“The circumstances the country and indeed the world is in make it very difficult to accelerate that. She has also indicated that she will look at deregulation, which is sensible.”
For the UK’s 5.5m small businesses, the most pressing issue is undoubtedly soaring energy costs. Truss consistently refused to set out during her campaign what she would do to combat soaring energy bills, promising to reveal plans by the end of her first week in office, but is reportedly looking at a freeze on some energy bills.
“We are looking for her to do something on energy bills, even cutting the rise in half will still be a £60,000 annual increase – it is an absolute killer,” says Adams.
“Reducing national insurance will be of little value because if we don’t open next year we won’t have any staff to be paying it for anyway. And reducing taxes takes a year to come in and by that time we might have gone bust anyway.”
Last week, the British Chambers of Commerce published its proposals including an emergency energy grant for small and medium-sized enterprises (SMEs), a temporary cut in VAT to 5% as well as the scrapping of the NI increase.
On Monday, the Institute of Export and International Trade called on Truss to immediately set up a taskforce to help micro-, small- and medium-sized businesses on issues such as the rising cost of energy.
“The challenge now is to deliver action that is big and bold enough to match the scale of the crisis threatening the existence of many small firms, and the jobs, livelihoods and communities which depend upon them,” said Martin McTague, national chair of the Federation of Small Businesses (FSB).
“Small businesses are crying out for a comprehensive response which cuts taxes, limits spiralling bills and provides direct cash support for the smallest businesses.”
Adams says the Barra Beach Hotel is enduring its worst year in the 16 that he has owned the business. The hotel weathered a 19-month closure during the coronavirus pandemic, thanks to government support schemes, but current occupancy rates of below 50% are unsustainable without further support.
“This may not be the pandemic, but the exceptional circumstances we now face mean government must play a central role in supporting our economy,” said Tony Danker, director general of the Confederation of British Industry.
Truss’s rival Rishi Sunak, whom she defeated by a closer than expected 20,000 votes, has criticised her unfunded plans as posing a risk to a UK economy already headed for recession.
“If we’re serious about getting the UK growing again, ensuring any slowdown is short and shallow, we need a serious plan for growth,” said Danker.
